Pod Foods gets VC backing to reinvent grocery distribution

Larissa Russell and Fiona Lee founded a cookie startup called Green Pea Cookie in 2014. The cookies were 100% natural, vegan and “handcrafted with love.”

The company failed, but not because the cookies weren’t selling. The business couldn’t keep up with the antiquated wholesale food distribution system’s steep costs. Two incumbent players, United Natural Foods Inc. and KeHE Distributors, essentially controlled its only pathway to grocery stores across the country. So the founders shut down Green Pea and focused their efforts on building the tool Green Pea had needed to survive: Pod Foods, a distribution and logistics platform for emerging food brands.

“We were like so many other young entrepreneurs,” Russell, Pod Foods’ chief executive officer, tells TechCrunch. “I had studied government and economics and did the cookie company because I wanted to create something better for the world but we realized there was a much bigger issue at hand and it wasn’t enough to solve for the end product, we needed to solve for the way the product reached consumers.”

Pod Foods co-founders Fiona Lee (left) and Larissa Russell

“The distribution system hasn’t evolved since World War II,” Lee adds. “For so many years, there’s been little evolution in this space, even since the advent of technology and the internet.”

Today, Pod Foods is announcing a $3 million seed round led by Moment Ventures, with participation from M12 and Unshackled Ventures to fuel the growth of its software and data-enabled platform. The capital follows a $250,000 pre-seed investment from Unshackled, a venture capital firm that invests in immigrant founders and, if necessary, helps them navigate the complex visa process.

Lee immigrated to the U.S. from Singapore five years ago to double down on Green Pea Cookie. Her business partner, Russell, had been handling operations in the U.S. while she helped build the business from her home country. With Pod Foods up and running, the founders now have the opportunity to bring Green Pea back from the dead. Instead, they tell me their focus and efforts are entirely on scaling their B2B software upstart. Green Pea is gone for good.

Pod Foods is an end-to-end platform that connects retailers with manufacturers, facilitating the overly complex wholesale-food distribution market. The startup works with a third-party network that handles both fulfillment and logistics to create a tool beneficial to emerging brands, big retailers and consumers. The company charges retailers on a subscription basis and takes a cut of each transaction. The end goal is to simplify an age-old process, allow startup brands the opportunity to sell products inside big retailers and make great products accessible to customers at a lower price.

The San Francisco-based startup has launched in the Bay Area and Chicago. Currently, it’s working with 350 food brands and 100 retailers. With a fresh funding deal, Pod Foods plans to scale 10x in the next 12 months.

“We want to change the way food is distributed,” Russell said. “We want to turn [the system] on its head so the consumer can get what they would like to buy in retail stores at an affordable price.”